Originally Posted by
GoodJet
Too big to declare bankruptcy, again?
I'll never forget the call from one of my mentors, a pilot at American who asked me over the phone one night: "should I vote on this pay cut so we don't go bankrupt?" I was still in my 20's and the lost decade was going strong. I actually still remember telling him that he shouldn't accept that and the company will just take your money. The pilot's pay was cut and the entire board was given 7 million dollars each as a golden parachute. I'm not sure if I recall the exact numbers correctly but it was a massive pay cut for the pilots. They declared bankruptcy anyway. I know this is in the Alaska history too but bankruptcy will gut a pilot contract, historically speaking.
It's worth understanding that corporate bankruptcy law has changed *significantly* since then. It's not a coincidence that several legacies all filed in the same time-frame before the new law took effect. No more quick trip through the BK drive-through to shed inconvenient obligations... if managers file today they are in serious jeopardy of losing control of the company, and their jobs. Basically the creditors, not the debtors-in-possession, are in the driver's seat today.
So no, AA managers will not declare BK unless they have no other alternative. I'm certainly not an AA fan-boy, but they are too big to fail, and they won't file BK as a matter of convenience.